Countercyclical legal and regulatory policy should be used to boost aggregate demand during a recession, participants at a panel discussion at the Brookings Institution proposed.

Policy-makers need to utilise all of the tools at their disposal to fight the next recession as there is a “very good chance” that fiscal and monetary policy will be constrained, Federal Reserve economist Claudia Sahm and law professor at Yale University Yair Listokin argued.

“It is important we take an ‘and’ approach